Turkey's Central Bank keeps interest rate constant

"Increase in inflation is driven by rising energy costs, temporary effects of pricing formations that are not supported by economic fundamentals, and strong negative supply shocks," the bank has said.

İstanbul

Turkey's Central Bank keeps interest rate constant

The Central Bank has kept its one-week repo rate unchanged at 14 percent.

In a statement, the central bank said today (May 26) that it closely monitors the effects of high prices globally on inflation expectations and international financial markets.

"Increasing concern over global food security driven by trade restrictions, high course of commodity prices, supply constraints in some sectors that have become more evident particularly in energy and food, and high transportation costs have led to producer and consumer price increases internationally," the bank said.

Increase in the inflation

"Increase in inflation is driven by rising energy costs resulting from geopolitical developments, temporary effects of pricing formations that are not supported by economic fundamentals, strong negative supply shocks caused by the rise in global energy, food and agricultural commodity prices.

"The Committee expects disinflation process to start on the back of strengthened measures for sustainable price and financial stability, along with the decline in inflation owing to the base effect and the resolution of the ongoing regional conflict. Accordingly, the Committee has decided to keep the policy rate unchanged.

"To create an institutional basis for sustainable price stability, the comprehensive review of the policy framework continues with the aim of encouraging permanent and strengthened liraization in all policy tools of the CBRT. The collateral and liquidity policy actions, of which the review process is finalized, will be implemented."

Turkey's annual consumer inflation hit a two-decade high at 69.97 percent in April according to official statistics, whereas it was over 156 percent according to the calculations of a group of economists.

The central bank's last interest rate change came in December 2021 when it cut its policy rate by 100 basis points from 15 percent to 14 percent.

Central Bank's course of policy rate changes

In the period when Central Bank Governor Murat Çetinkaya was removed from office on July 6, 2019 and Murat Uysal was appointed in his place

In July 2019, from 24 percent to 19.75 percent
In September 2019, from 19.75 percent to 16.50 percent
In October 2019, from 16.50 percent to 14 percent
In December 2019, from 14 percent to 12 percent
In January 2020, from 12 percent to 11.25 percent
In February 2020, from 11.25 percent to 10.75 percent
In March 2020, from 10.75 percent to 9.75 percent
In April 2020, from 9.75 percent to 8.75 percent
In May 2020, from 8.75 percent to 8.25 percent
In September 2020, from 8.25 percent to 10.25 percent
In October 2020, from 10.25 percent to 15 percent

In the period when Murat Uysal was removed from office as the Central Bank Governor and Naci Ağbal was appointed in his place

In December 2020, from 15 percent to 17 percent
In March 2021, from 17 percent to 19 percent

In the period when Naci Ağbal was removed from office on March 20, 2021 and Şahap Kavcıoğlu was appointed in his place

In September 2021, from 19 percent to 18 percent
In October 2021, from 18 percent to 16 percent
In November 2021, from 16 percent to 15 percent
In December 2021, from 15 percent to 14 percent

* In the months that are not indicated in this table, the policy rate was kept unchanged (The Monetary Policy Committee of the Central Bank convenes every month).

(VK)